Lawmakers will return to the Capitol on Monday for the start of the June session leading up to the end of the month deadline to pass a state budget, buoyed by positive economic news.
More intense jockeying will likely take place over how and when to spend the state's $7 billion in American Rescue Plan funding than on simply balancing the state's upcoming fiscal budget, lawmakers said Friday.
The Department of Revenue announced Tuesday that May tax revenue was $1.6 billion or 65.4 percent more than the department had anticipated.
“We are also nearly $2.9 billion above our estimate for the fiscal year as of today. This is very positive news with one month to go in the current fiscal year,” Revenue Secretary Dan Hassell said.
House Appropriations Committee chairman Rep. Stan Saylor, R-York County, said that the increased tax revenue has largely been driven by economic activity linked to federal stimulus funds and the federal Paycheck Protection Program.
And with $7 billion in American Rescue Plan dollars to work with the state government should be in good shape to balance the 2021-2022 budget this month, Saylor said. But Republicans are already worrying that the economic boost won’t last and that budgets in the coming years are going to be more difficult to balance, he said.
As a result, Republicans in the General Assembly will be looking to manage the American Rescue Plan dollars so that the state can balance its budgets in the next few years without having to deal with a financial crisis when the American Rescue Plan funding runs out, Saylor said.
“Right now, we're trying to make sure that as we go forward, we don't play games with revenue. And immediately, taxpayers might say, oh, we're gonna spend all this money, and then come back after the election in 2022 and raise taxes or cut programs and stuff. So I'm trying to be very responsible about the $7 billion you got in federal dollars,” Saylor said.
Saylor said that he believes the state should focus its American Rescue Plan funding on schools and workforce development.
“Right now our focus is going to be on education. It's going to be focusing on job creation, job training and things like that as we move forward,” he said.
Republican lawmakers haven’t released a detailed proposal for spending the American Rescue Plan funding. Neither has Gov. Tom Wolf.
“We look forward to working with the legislature to ensure that funding supports Pennsylvanians to ensure that we can move forward from the pandemic,” Wolf’s spokeswoman Elizabeth Rementer said.
Democrats in both the House and Senate have released proposals for how to use the American Rescue Plan funding. The Senate Democrats have proposed using $2.4 billion of the money on people-focused spending -- education, job training, child care, utility assistance and business assistance The Senate Democrats have also called for spending close to $2.5 billion on infrastructure and $1.185 billion on public health.
House Democrats have proposed a variety of uses for the money, including $250 million for businesses that were unable to stay open during the pandemic, $500 million to create jobs, $200 million to help pay for expanding access to high-speed Internet, $511 million to train and pay direct care workers, $200 million to fix toxic schools.
State Rep. Mark Longietti, D-Mercer County, the Democratic chair of the House education committee pointed to broadband expansion, addressing the problem of aging and toxic schools and boosting the pay for child care and direct care workers for seniors and those with intellectual disabilities, as being priorities that he hopes will be addressed in the rescue plan spending.
“The top priority that speaks to me, and I think a lot of people, is broadband. First of all, it's infrastructure, it's a one-time expenditure, they can have a long-lasting effect. And I think it's the opportunity for small communities like where I live, to have an even playing field,” Longietti said. “As more companies decide to have workers telework. That means they can live anywhere and our communities are attractive to people, but they have to have a reliable high-speed internet connection. It's similar to the electrification of the United States, and 100 years ago,” he said.
Investing in boosting the pay for direct care and child care workers would create a new cost that would continue after the American Rescue Plan funding runs out, but it’s a cost the state needs to pay, he said.
“These are the these are the people that take care of our loved ones who are elderly, who have intellectual and physical disabilities. And we're at a crisis” because the wage for direct care and child care workers is too low to attract new workers and keep existing workers on the job, he said.
“Now is the time to get those folks up to a competitive wage and stabilize that workforce and provide for our most vulnerable in what we're obviously going to need to continue that commitment into the future and find a way to do that,” he said.